OREANDA-NEWS. In the connection with the information in the media PJSC RusHydro (ticker symbol: MOEX, LSE: HYDR; OTCQX: RSHYY) confirms that it has signed a term sheet with PJSC VTB Bank for a potential capital-raising deal.

According to the document, VTB may acquire up to RUB 85 bn of newly issued shares of RusHydro with conclusion of a 5-year forward contract. The raised funds will be primarily used to optimize capital structure of RusHydro subsidiary holding, RAO ES of East, including refinancing of its debt portfolio.

During the life span of the forward contract RusHydro together with VTB Bank will undertake a set of measures, aimed at increased shareholder value of RusHydro, with the view to sell the shareholding held by the bank to a strategic investor (or investors) in line with the plan for partial privatization of RusHydro, approved by the Government. The plan assumes that no less than 50% plus 1 share of the Company will remain in under the control of the Russian Federation.

Upon maturing of the forward contract, provided the shareholding is sold, one of the parties will pay up to the other party the difference between the sale price and the amount of financing, based on the hurdle return on equity required by the bank.

In the nearest future, the parties plan to start preparing legally binding documents, and obtaining approvals of necessary documents by respective government bodies and developing detailed plan of shareholder value management, including measures aimed at increased efficiency of operations and CAPEX as well as increased dividend payout, linked to acting KPI and roadmap of partial privatization of PJSC RusHydro.